[MUSIC] This is Mike Rosenberg, and strategy and sustainability, we are in section five, talking about differences, this is segment five, in terms of what's special in those two countries regarding environmental issues at how business relates to the environment. China and India are linked by many things. They're linked by geography, they're linked by history. Not everybody knows that in 1962, the two countries went to war, while the United States and Russia were involved in the Cuban missile crisis. Chine attacked India along its 3,000 mile border, occupying some provinces, well, there's two parts of a province which is under dispute. That issue is access to the Himalayan mountains, and then very, very high up 4,000 meters high, there's land which both countries kind of claim as their own. And the relationship has kind of been tense, but cordial ever since. One of the issues that are at a geopolitical level is the situation in Tibet, and the Dalai Lama, who lives in India. And of course, China occupied Tibet, and believes that Tibet should be part of China. And many people believe that Tibet should be independent. In any case, they are cordial. Here's an image with Prime Minister Modi and President Chi last year, and there is an increasing in commercial trade and political relationships between the two countries. China, of course, is enormous. It's enormous by any measure, and talking about anything you'd like to talk about. It's the world's third largest country. It's got vast deposits of coal and other minerals. It does have, however, several water shortages in the north. There still is water in the south, and we'll talk a little bit about that. China's population is enormous. It's becoming richer. Demanding tremendous amounts of sensibility and regulations. And they surprise me by showing how much sensibility they had towards environmental issues, and by stating emphatically that the Chinese government was obliging them to have kind of the same environmental standards as many places in the west. China does not allow interest groups to operate, really, in the country. And on a kind of geopolitical basis, as I said earlier, has agreed to have its carbon emissions hit a peak, and then go back down. But on this issue of enforcement, it's a very complicated situation. The Chinese government has centralized ministries on different things, but then enforcement is a local issue. And in most countries, when enforcement is local, the local people can be influenced by local politics to look the other way, or to allow local businesses to do what they need to do to make money. However, China is also very much paying attention to corruption across the country with a very, very high profile cases of people going to jail for offenses. So, China is, right now, in a very, very interesting and very complicated situation, with respect to environmental regulation. The issues there are fundamentally air and water. Here's an image of, you can get an app for your phone, which says how bad the air quality is in the major cities of China. The image below is Chongqing, where you can't even see, because of the smog. These children are in a dome. The International schools in Beijing are kind of competing with each other for their dome play areas, so that the kids can play, and they can play badminton in a controlled and clean air environment, because you don't really want the kids to go outside very often. People I know that live in Beijing, they live in houses with air filters. They drive cars with air filters, and their kids go to schools with play areas indoors. So, it's a very exaggerated situation right now in terms of air quality. And the water quality is also suspect. In the first place, as I said earlier, there is not enough water in the north. And the Yellow River is actually running dry from time to time, before it gets to the sea. So, there's this enormous project called the North, South Water Transfer Project, which is to move water from the relatively water rich south to the north. This is a project that China's been working on for many years about $80 billion spent so far, and there's still quite a lot to go. And now the western route is a little bit controversial, because in the western route, they want to divert water high up in the Himalayas, and some of that is the source of rivers that come down into India. So again, these countries are linked through the reliance on the snow melt coming down the Himalayas. This is an image of the river in Chongqing, this is the river that which turned red in 2012, because of an accident and some chemicals which got dumped into it. And this is an image of normal river in China, which is just terribly polluted with lots of garbage in the sea. So, these are two of the critical issues that Chinese will have to figure out. India is in a different situation. It's in some ways similar, but in many ways, different. It's got very little oil and gas, huge amounts of coal. And while water is plentiful in the country as a whole, many people are suffering in what's called economic water stress, which means that yes, there's water on the land, but there is no sanitation or access to fresh water in the village, because no one wants to pay for it. India's population can be segmented in different ways, rural and urban is one. And then you've also got different levels of rich and poor people, which really define the way India works as a country, if you will. In terms of its environmental legislation and its sensibility, large Indian companies are producing reports, and they say they comply with all legislation. The legislation is, in fact, very, very advanced. India has a very strong legal tradition and very, very strong environmental laws. The enforcement of those laws, however, is a bit suspect. And whether the companies actually do what they say they do, again, is some matter for some debate. The interest groups there, and there are interest groups, in India, there are, Greenpeace is there, many of the international interest groups are there, as well as local groups. But they're under some pressure from the government, because the government feels very strongly that India needs to become more prosperous. One of Prime Minister Modi's issues is 40% of the country lacks access to electricity. So, he's not ready to curb its development of coal fired power plants until someone can offer him a solution. And one of the key points in the Paris Accord was the creation of the $100 billion fund exactly to finance alternative energy products and low impact carbon projects to be able to provide people in India and other developing countries with access to basic necessities. And a lower carbon footprint, perhaps, than they would do so on their own. It's a huge issue in the international debate, but if you look at India, again, it's air, water, and waste. This is a chart from the World Health Organization about the world's most polluted cities. And if you look at the chart, Delhi is at the top of the list. Five of the top ten worst cities in the world are Indian cities. So, while China gets a lot of attention as being a place with terrible air pollution, India is actually worse. This is a picture of the great Ganges river. Mother Ganges, as they call her in India, which is really the lifeblood of the country. Both in real terms, in terms of economic prosperity, and water for people. But also, even in religious and spiritual terms. And then Ganges is deeply polluted. It's got a tremendous crisis of pollution. In fact, the government has a program in place to clean it up, but the program seems to be stalled. The ideas are great, but I'm not really sure if it's actually getting the traction on the ground, and India's also suffering under mountains and mountains of garbage. And in fact, India has been a place to send garbage, because you can actually send your garbage to India, where you'll get, poor people will pick through it, and that's cheaper than dealing with garbage back in the west. So if we look at the different strategic options, again, we get this great dichotomy where some international companies operating in India and China are very much at a show and tell, or a wait and see operation, where they're compliant with all the laws and going a little bit further than that. And there's a suspicion that a whole bunch of local companies are doing much much less. You don't have a lot of Chinese companies in pay for principle, or going far, far, far out. Although, you do have in certain segments, in wind energy and electric cars, certain companies which are doing quite a lot. So again, it's a very complicated situation which really needs to be looked at for a specific industry, for a specific part of one of these countries, and specific moment of time. [MUSIC]
